In 1950, the average working-age person in the world had almost three years of education, but in East Asia and Pacific (EAP), the average person had less than half that amount. Around this time, countries in the EAP region put themselves on a path that focused on growth driven by human capital. They made significant and steady investments in schooling to close the educational attainment gap with the rest of the world. While improving their school systems, they also put their human capital to work in labor markets. As a result, economic growth has been stellar: for four decades EAP has grown at roughly twice the pace of the global average. What is more, no slowdown is in sight for rising prosperity.

High economic growth and strong human capital accumulation are deeply intertwined. In a recent paper, Daron Acemoglu and David Autor explore the way skills and labor markets interact: Human capital is the central determinant of economic growth and is the main—and very likely the only—means to achieve shared growth when technology is changing quickly and raising the demand for skills. Skills promote productivity and growth, but if there are not enough skilled workers, growth soon chokes off. If, by contrast, skills are abundant and average skill-levels keep rising, technological change can drive productivity and growth without stoking inequality.

Several of the government’s recent economic initiatives have the potential to kick-start Thailand’s economy. To achieve the economic transformation it has been aspiring for, having a skilled workforce and much more strategic investments in research and development (R&D) will be important.

Following nearly four decades of impressive economic growth at 7.7 percent, the Thai economy has slowed sharply to 3.3 percent over the last decade from 2005-2015. At this rate of growth, it would take Thailand well over two decades to achieve high-income status.

Ten years ago, Thailand was ahead of its neighbors and peers on virtually all the competitiveness indicators tracked by World Economic Forum in its Global Competitiveness rankings.

Today, other middle-income countries have caught up, while more advanced economies in the region have surged further ahead, particularly in technological readiness, higher education and training, innovation, financial market development, institutions, and business sophistication.